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News/Business. (2010) Grain harvest; luxury hotels in London; off-season revenue streams for European ski resorts. (CC) (Stereo)

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London 14, Ufc 10, Mma 7, New York 7, Russia 6, Us 5, French 5, Barkin 4, Europe 3, Mixed Martial Arts 3, Kcet 2, Reilly 2, Sangster 2, Al-waleed Bin Talal 2, Coors 2, Uk 2, Los Angeles 2, Black Sea 2, Ny 2, Egypt 2,
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  WHUT    World Business    News/Business.  (2010) Grain harvest; luxury hotels in  
   London; off-season revenue streams for European ski resorts....  

    September 21, 2010
    6:00 - 6:30pm EDT  

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>>after some regions having had the worst cereal harvests for years, what will the long term impact be on global food markets? >>there will be difficulties in meeting the requirements to feed the world in future. >>luxury in london, where high end hotels are attracting investment despite the recession >>we were able to secure what we believe is one of the most attractive hotel sites in london. >>and why taking a summer holiday was no longer an option for financially stretched ski resorts. >>abirached: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. this year, around the world,
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droughts, floods andwildfires have meant harvests for many crops are significantly lower than expected which lead to russia introducing a two season export ban on wheat and even food riots in mozambique. but is the situation really that bad and what is the outlook for the long term? >>reporter: at the start of august, the russian government banned all exports of wheat until the end of the year. the price, already at a two-year high jumped eight per-cent in one day but news the ban was being extended to the end of 2011 sparked a much smaller rise as much as the market had expected are prolonged export freeze by russia. >>hind: it added fuel to the fire that was already taking place in the grain market caused in largepart by the fact that russia has experiencing significant drought along with other parts of centraland eastern europe, and indeed climate conditions
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elsewhere in the world, and it has also created asituation where one of the cheapest sources of grain available to the world market has been suspended. >>reporter: russia stands to lose around 15 billion dollars or 1 percent of its gdp from grain losses this year, with its export share falling from 15% to just 2.5%. exporters in the us and europe are rushing to fill the gap but at a price to the buyer. >>chandler: the cost of wheat out of the us might be exactly the same as it is out of france or russia but the cost of freight to get it to let's say egypt is significantly more out of us than what it is out of europe and the black sea. >>reporter: egypt is scrabbling to find replacement supplies. as the world's largest importer of wheat the country traditionally buys a third of its needs from russia. other countries in north africaand the middle east - which imports half its food - have also been hit hard by the russian ban. >>muriel: this is milling
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wheat - destined to make bread. the global demand for wheat is at a record level - an estimated 665 million tonnes in 2010-11. but the global wheat crop will only be around 646 million tonnes - which means wheat is trading at a premium. based on the chicago futures market wheat is a 100 dollars a tonne more expensive than maize, up from a 30 dollar a tonne premium at thestart of the summer season. so will the bread this wheat makes be selling at a premium too? >>archer: wheat is only a small part of the bread price. a change in the wheat price will only be reflected partly in the change of the bread price and quite often on a lagged basis. >>reporter: although the un food inflation figure is lower than it was two years ago, the index spiked in august to its highest level in that period - mainly due to the russian wheat ban. but in thattime global stocks of wheat have risen to 197 million tonnes from 121 million, buoyed by bumper crops.
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>>chandler: the last two years we've had pretty much idyllic weather throughout the world and we really haven't had these production set-backs. but certainly this year is more back to what we were sort of seeing in 2007 when we had production issues in a number of regions. >>reporter: two years ago those 'production issues' sparked food riots as the cost of food soared in response to higher raw material prices. >>hind: clearly there are likely to be some concerns about the future. the bigger risk is not so much about the long term availability of products but that markets are likely to be much more volatilein future. >>reporter: so what kind of profit are farmers in the west making? tapp says most of his clients have done well, at least in the short term. >>tapp: probably the majority they will now have sold a reasonable proportion of their crop into this market at prices 20-30-40-50 pounds more than they had anticipated or more than they had budgetedand they will do well.
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the downside is that following on from wheat price spikes you tend to have movements in fertilizer prices and we're already seeing quoted prices ex the black sea going up quitesharply. 26,5'' >>reporter: meanwhile farmers like uk wheat grower mike barker are keeping a wary eye on the market. >>barker: i track it daily, sometimes three or four times a day. i get the times. they always list it daily in the paper, but i do go online and follow it. >>reporter: with the wheat price so high, barker is waiting to get the last of his harvest in the barn before striking a price, as any shortfall in his estimated crop would be cripplingly expensive to fill. he has already sold half his wheat harvest - if not for top dollar - then for a decent profit. but the high wheat prices are not good news for all farmers. >>hind: animal feed prices will undoubtedly rise as a consequence of the current grain price. it's difficult to say by how much because equally other grains are used for animal
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feed like maize like soya which are not experiencing the current spike. >>reporter: so to meet demand producers must increase yields - and that is a huge challenge. 5,5'' >>hind: yields have been stagnating in the course of the last ten years, so whereas in the '90's, 70's and 80's we saw something like an average 4% growth in grain yields, that declined in the late 1980's and 1990's to less than 1% .and unless we see renewed investment in research and development to improve productivity in grains and indeed in animals then i think there are likely to be difficulties in meeting the requirements to feed the world in future. >>reporter: with the global population set to top 9 billion people by 2050 the pressure is on. the un's food and agriculture organisation forecasts total world demand for agricultural products will jump 60% between now and 2030. feeding the world is only going to get harder.
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>> abirached: and although concerns over global food supply, it's worth remembering that the 2010 wheat harvest is in fact the 3rd largest in history. despite the global recession, demand for luxury hotels in london has remained high. even in a city hit harder than most by the downturn, occupancy rates are buoyant, new hotels are opening up and someof the better known names are undergoing serious renovation. >>reporter: grandest of the old school...the savoy hotel in the strand. it opened its doors in 1889 and marilyn monroe, charlie chaplin, presidents and princes have all stayed there. the savoy'slocation on a quiet corner on the banks of the thames makes it one of the capital's prime hotels. but it's been shut
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for a make-over since 2007. it finally reopens in october, 18 months later than planned. >>macdonald: a lot of things went wrong. and it's an old building. and, you know, what goes with an old building in terms of its condition is never truly understood until you start peeling away the layers. , it's clearly a lot more than what was originally envisaged >>reporter: the refurb cost around 340 million dollars. fortunately, the savoy's owner, the saudi prince al-waleed bin talal, has deep pockets. >>macdonald: i think under private ownership who we've had who've been extremely supportive, we're in a very fortunate position in terms of staying the course. had we have been in a different situation, it might...likely have been much, much more difficult. >>scott: the royal suite costs 15,000 dollars a night and even though the savoy isn't even open yet, it's already taken reservations for it and indeed the entire hotel is sold out for the first night. >>reporter: also out of service for the past 2
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years was the four seasons hotel in park lane...again getting major renovations like the savoy. prince al-waleed bin talal owns a substantial stake in it as well: together these two top hotels account for 13 percent of luxury rooms in the city. >>slattery: it's not just those hotels reopening, it's other luxury hotels coming on stream. corinthia are opening in northumberland avenue in 2011, another 300 rooms...that's an additional 8 percent. they'll be at the thick end of 20 percent additional rooms on board. that will require quite a bit of recovery..it will take much longer than most people imagine. >>reporter: corinthia is more optimistic. it's spending 420 million dollars on its first london flagship property - an old ministry of defence building, originally a hotel by the same architect thatdesigned the savoy and on the same stretch of river. >>dixon: we were able to secure what we believe is
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one of the most attractive hotel sites in london. these opportunities very, very rarely come along and we were part of many people that bid to buy this site. competition is always good. particularly at this top level of the market. if you are competing as one of the top 5 hotels in london, your clients are going to be wanting to see what you deliver. >>reporter: the corinthia london is due to open in spring 2011. and even at a time of tight credit, this high profile project was able to secure half its finance from barclays bank. >>dixon: they've believed in the location and the desire that we have to create this hotel and alsothat it's in a very strong market. i think they saw the opportunity and they were able to see what we were going to create in terms of value for the long-term. >>reporter: which represents something of a shift in attitudes, as high end hotels have not traditionally been attractive to investors. >>sangster: the hotel industry itself has been something of a backwater in terms of property investment.
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in terms of commercial property, hotels represent, globally, something like 5 percent of the market. >>slattery: quite frankly, big capital has not been particularly strongly attracted to hotels. >>sangster: now it's a much more hard-nosed transaction. you know, what's the return going to be. and i think one of the things that they've begun to understand is, particularly with a highly valuable asset like a luxury hotel, you've got to be in it for the long term. >>reporter: there's been talk that chinese investors are interested in buying prime hotel properties in london and that travellers from the east are going to be part of a tourist boom in london in the future. but this could be more a case of wishful thinking... >>sangster: it's one of these situations which i think often can be over-egged at least in the short term. i think it's going to be a profound change. we're seeing a profound shift in terms of global economics. we're seeing a shift of power from the west to the east. but the typical thing is it's going to take twice as long as people expect.
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>>slattery: there will be growth absolutely. there will be strong growth, but some commentators in the market have become a little florid about it. >>reporter: london, though, looks very attractive whether you are an investor or a traveller as oneof the effects of the uk's recession - sterling's decline - has resulted in somewhat of a silver lining for the london's luxury hotel market: >>sangster: if you look how the pound sits against the euro. it's so effectively the rates are off 25 percent against what they were a couple of years ago. it actually looks quite good value coming to london right now. >>reporter: another boost for the capital...the london 2012 olympics. although the games themselvesare only 3 weeks long, the effects last beyond that and start earlier. >>dixon: we've had huge levels of interest for people that want to book accommodation for 2012. but also, more importantly, people coming to london in 2011 to start to make their plans. >>reporter: so, as south africa got a boost during the recession
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from football's world cup, luxury hotel owners in london are hoping that the 2012 olympic games will bring them the gold... >> abirached: still to come on world business... >>the cold winds of recession have hit the ski industry hard, so some resorts have stayed open all summer to maximise revenue. >>and trouble brewing in new york where a fight is on to legalize mixed martial arts banned in the big apple.... and the rest in just a moment on world business... >> abirached: the european ski season is nearly upon us, but the recession has hit the industry hard. visitor numbers were down last season, while running costs continue to rise. so many resorts
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havebeen looking to additional revenue streams in the off season to offset the drop in winter income. >>reporter: last winter, helped by healthy snowfall, the ski resort of st lary in the french pyrenees sold 600 thousand ski passes bringing in around 16 million dollars. not bad for a small resort, but the industry is on a tricky slope. hiking the price of lift passes, already close to 40 dollars a day, in these tight economic times is not an option. the solution - make the most of the resort in the summer. >>bockman: just 10% of western europeans go skiing each year and in fact that number is going down.so right now ski resorts have to look for new business opportunities elsewhere. >>reporter: the local authorities have invested close to 80 million dollars here over the past decade. the lifts are a large fixed cost that have to be
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maintained, so it makes sense to use that assetin the off season. >>bernia: (in french) being open all year is a necessity for us because we have an economy to keepbusy. shops need to be able to stay open all year around, the local population especially the ski staffneed to have a future. its always difficult for seasonal staff to work for just the ski season and find an apartment for four months and then have to find work on the coast during the summer. so if we can offer them jobs over winter and summer then they stay here and contribute to the local economy and that helps keep the valley live. >>reporter: and that's exactly what they have done, creating a bike park using the same red and black runs skiers blast along in winter. since the park opened 2 years ago the number of summer bikers has doubled to 15,000. not a huge number, but still enough to bring in an extra 200,000 dollars. >>mir: (in french) it's obvious in the current economic crisis we see the number of clients we have melt. we are facing difficult market conditions and we must diversify our activities
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to make up for the shortfall in winter as the number of visitors fluctuate wildly so does revenue. >>reporter: the other asset ski resorts have is the magnificent scenery - this one is no exception and its steep and fast flowing rivers are a natural fit for white water rafting. not only another revenue stream, but also a great way of providing year round job security to some of the 1200 seasonal workers and stabilizing the local economy at the same time. before, many staff would leave for summer work on the coast and a sizable proportion don't come back. >>gorry: (in french) it's essential to have a summer sports activity to do because it's difficult to stay here all year around. generally everyone has something else they can fall back on when the ski season ends. >>reporter: it is not just extreme sports that bring home the bacon. this rare breed black pig farmis a surprisingly popular tourist
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attraction on the outskirts of town. visitors tour the farm learning about the breed before sampling and hopefully buying some pricey ham. it's a new form of eco tourism, especially popular with urban families and shows visitors another side of mountain life. >>costalat: (in french) people have far more time in summer - the rhythm is not the same as duringa week of ski. now they take their time and want to discover different aspect of life here. >>reporter: a week's skiing will set a family back around 3000 euros; summer visitors spend significantly less. even though the total number of tourists is the same for summer and winter, the 4 monthski season generates 80 percent of the town's 90 million dollar revenue. the key challenge is to get off season tourists to spend both more money and time here. >>bernia: (in french) we want tourists to discover
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our station over the summer because we have a lot to show them whether it's cultural, sports or food tasting. there is a lot to do but people just don't know it yet and we have to get that message out. >>reporter: it's worth remembering that even when the snow begins to fall and families head to the mountains, there is often at least one person that can't stand the slopes. in fact 15 percent never even strap on a pair of skis, preferring spas or health treatments instead. it seems whatever the season the more a resort can offer the more attractive and prosperous its future will be... >> abirached: the sport of mixed martial arts started in the us in the 1990's back then it was largely unregulated and regarded by most as a violent, no holds barred freak show. over the last decade,however, the sport has been transformed into a multimillion dollar enterprise that continues to grow. but not everyone is enamoured with mixed martial
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arts, not least the state of new york which refuses to legalize the sport. >>reporter: from training gyms in new york, to sold out arenas in britain...mixed martial arts is hitting unprecedented heights, lead by the ultimate fighting championship, or ufc, .a promotions company that today is worth more than its fighters' weight in gold.. >>zelaznik: if you pick up a forbes magazine there was a recent valuation of the company that was over a billion dollars. >>anderson: in the last ten years we've grown dramatically because of the ultimate fighting championship. it's really helped popularize the sport a lot. >>reporter: the sport has truly risen from the ashes, 10 years ago, a spectacle that sold itself asa violent, no-holds barred scrap with very few rules had scared off sponsors, broadcasters
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and legislators. in america, it was banned in 36 states. >>zelaznik: when the company was first launching it was almost a taboo to be associated with the ufc. >>reporter: but close to bankruptcy, from 2001 the ufc began a complete rebranding exercise. extensive rules, weight classes and five round maximum bouts were introduced, and the results have been remarkable >>barry: what....the ufc have done is take it to the next level. tighter regulations. making more unified rules. adapting to each one of the athletic commissions that they deal with. it's become super successful >>reporter: in the sport's heartland, the united states, spike tv, part of the mtv family, relies heavily on the ufc to deliver a lucrative 18 to 49 male
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demographic, through hugely successful programmes such as reality show the ultimate fighter >>diamond: it's critical and really important for us. the highest rated show on our network has been the ultimate fighter. >>reporter: and as the sports fan base has grown...blue chip sponsors have followed... >>diamond: but we've seen the progression. we've seen the direct tvs and the budlights and the toyotas and coors, you know, coors has been in there. >>barry: all these multi-million-dollar, billion-dollar companies are jumping on board and getting involved with the sport. >>reporter: but one place not jumping on board is new york state, because despite persistent lobbying from the ufc, it refuses to join over 40 other states where the sport is sanctioned. that's largely due to a campaign waged by a politician i met in state capital albany, one who regards mma as excessively violent. >>reilly: when you can kick and knee and elbow and choke a downed opponent, a person
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lying helplesson that is certainly a violence that is unacceptable. >>reporter: reilly also believes the mma is inherently unsafe. others disagree. >>barkin: the fact of the matter is that this is a safe sport. people want to do it in ny. we have referees and judges that are ready to start judging it here as soon as it's legalized. >>reporter: in the past 3 years 2 fighters have been killed in sanctioned mma fights in the us, andwhile advocates admit the sport, like many others, has it's risks, they argue it is safer than boxing, which is legal. >>anderson: if you look at boxers. 12 rounds straight, that's 36 minutes hitting one area as opposed to watching a 5 minute ufc match where you can hit any area, and you're not repeatedly being able to hit it. >>reilly: they argue not as many people have been killed as in boxing and i say...oh that's
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a greatreason for legalizing it. >>barkin : at what point do you say well then are we going to ban football? we know football causesinjuries. >>reporter: furthermore, by not staging mma events, advocates argue that new york is missing out onvaluable revenue. the ufc believes each of its events can generate between 12 and 20 million dollars for the local economy. >>zelaznik: it doesn't make any real sense that somebody who lives in ny can go over the border into nj and watch the ufc and thus depriving ny of very important revenue >>anderson: i mean, they could generate so much, you know, money just off people staying in hotels,flying in. >>reilly: well let's have prostitution then, or whatever you want. >>reporter: in fact a recent marist poll of new yorkers found 2/3rds of the public didn't want mma legalized. >>barkin: like all polls, i think depending on how you ask the question you can
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sort of get a specific answer. >>reporter: however the question is repeatedly posed to new york's lawmakers...the answer they'll give is difficult to predict. >>barkin: forty five states have legalized this and i'm not sure how much longer we can afford to allow this opportunity to be missed both from an economic standpoint and an entertainment standpoint. >>reilly: i don't find those acceptable reasons that everybody is doing it or it's going to happen anyway. i think we as a people and here in ny we as a state have to step up and make decisions of integrity. >>reporter: quite simply...no-one can be 100% sure when or even if we'll ever see events like this in new york. >>zelaznik: i suspect it's just a matter of time. >>anderson: i truly don't think its going to be legal in the next couple years in nyc. i just don't. >>barkin: we think there's a good shot that this year it will be passed into law.
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>>reilly: three years ago people would have been sure that it would have passed within a year, and we wouldn't be sitting here 3 years later, with me being asked the question 'isn't this inevitable'. >>reporter: but what does seem to be inevitable is the inexorable rise in mma's popularity. whetheryou like it or not...the ufc is now the world's biggest pay per view provider...selling more ppv's than boxing, wrestling and rock concerts combined... >>zelaznik: i don't even think we're close to scratching the surface. the reality is we have a verybig ambition which is to make this the most popular sport in the world. >>reilly: i find them very unacceptable people in many ways 5'' >>diamond: i think this is only the beginning for mma and for the ufc. >>and with or without the big apple on board, it does indeed appear that the company and the sport itself is onto a winner.
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>> abirached: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.
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